Credit counselors say credit card cash advances should only be a last resort, and their advice is backed by a new CreditCards.com survey of cash advance rates and fees on the top 100 credit cards. Using a credit card to withdraw cash at an ATM or write a check that comes with a monthly statement can cost about 24 percent annual interest -- 6 percentage points more than the average interest rate for purchases, in addition to an average 5 percent fee.
Using cards for purchases provides an interest-free grace period if a statement is paid off in full and on time, but interest on cash advances starts immediately and can mushroom quickly if the debt is not repaid quickly. The survey also found that cash advance interest rates ranged from 9.99 percent to 36 percent on the 100 cards tracked; while fees ranged from 3 percent to 5 percent, with a $10 minimum charge. Banks say that higher rates for cash advances reflect a higher risk of not being repaid, as well as a lower limit for cash advance withdrawals. A consumer who took out a $1,000 cash advance and repaid it $100 a month could expect to pay about $190 in fees and interest. Fortunately, an October 2013 report by the Consumer Financial Protection Bureau found that only 3.1 percent of active credit card accounts took cash advances in a three-month period at the end of 2012, down from 4 percent in 2008.